Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.033 | EURUSD 1.11281 | AUDUSD 0.80091 | NZDUSD 0.7703 | USDCAD 1.20168 | USDCHF 0.93942 | GBPUSD 1.54379 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.18 | 118.54

EUR/USD             1.1129 | 1.1102

EUR/JPY               132.51 | 131.67

AUD/USD            0.8022 | 0.7981

NZD/USD             0.7680 | 0.7593

USD/CAD             1.2039 | 1.2005

EUR/CHF              1.0456 | 1.0438

USD/CHF             0.9406 | 0.9389

GBP/USD             1.5448 | 1.5418

EUR/GBP             0.7208 | 0.71965

For today

• EUR: The Euro’s traded lower from the close moving through the early part of the session unable to regain the opening levels and then drifting into the later part of the session towards the 1.1100 level as cross JPY trading dominated the market after the BoJ monetary policy statement. After the rally yesterday the market has room to the topside to the 1.1180 areas before strong offers appear in the market with possible offers running to just beyond the 1.1200 level and then likely stops, offers reappear towards the 1.1230-50 areas and the market is likely to see those offers continuing into the 1.1300 levels. Downside bids are possibly less complex with minor support into the 1.1080 levels before opening to a run to the 1.1000 areas with little time for the market to fill after yesterday’s rally, question is though will we hear comments from the ECB and other national finance ministers in an attempt to curtail the Euro’s rally? Stops through the 1.0980 level will likely see stronger stops and an opening for a retracement to the stronger levels below 1.0900.
• GBP: Cable drifted through the Asian session with a slightly better range over the course of the session than the Euro however the result was similar pushing from the opening levels towards the 1.5450 level the market was unable to find sufficient impetus to test the topside before starting a steady drift lower to test the 1.5420 levels as the market moves towards the grey hours. As with the Euro the Cable see’s fairly stronger offers in the market around the 1.5500 levels with further break out stops likely through the 1.5510 areas and opening up a test of the 1.5600 level. Downside bids are likely to be thin on the ground and the downside is likely to be dominated by the Euro and the EURGBP cross, a break through the 0.7220-30 areas will see a stronger Euro and the GBP contained and a weaker Euro will allow some movement for the GBP with the drag of the Euro’s pulling it gradually lower, light bids into the 1.5400 areas will give way to light stops and an opening to test the 1.5300 levels with little to halt a slide.
• JPY: The USDJPY peaked in early trading just above the 119.15 level before moving into Tokyo sliding steadily lower as the market awaited the BoJ monetary policy announcement, the market had touched through the 118.90 levels before the release, end of month USD buying was unusually quiet this month and once the policy came out unchanged as expected the market dipped quickly through to the 118.75 levels and then bounced as profit taking in EURJPY took the market to the 119.00 levels and then stronger selling forced the market down into the 118.50 areas and into the grey hours just off those lows. Topside offers remain into the 119.40-50 areas before opening to a test in possibly stronger offering areas around the 119.80 levels, through the 120.20 areas with little respite from the offers. Again the offers are likely to continue however, at this point JPY weakness would have to be supplanted by USD strength to continue. Downside bids into the 118.50 areas continue through the level and are likely to increase as the market reaches for the 118.00 areas and while a push through there does hold potential for a deeper move yield players could possibly move in to bolster the downside levels. The commentary for the BoJ is likely to be released around 0600hrs GMT so you could already be reading this and wandering what is going on.
• AUD: The market in the Oz fell back following the small collapse into the close and the market saw the Oz trade towards yesterday’s lows around 0.7980 before finding a base, the drop was more to do with the commentary that accompanied the RBNZ release and once the market settled down a little the market again pushed higher as the AUDJPY carry trade saw light buying taking the Oz back to 0.8020 for a limited period before drifting back as the USDJPY moved lower and basing off the 0.7980 levels into the London session. A push through the 0.7980 levels see’s very little on the handle however, sentiment is likely to be the key to a move lower with bids likely to appear as long as commodity prices hold up, a move through the 0.7980 levels is likely to see a few weak stops before opening a test to the 0.7900 levels and a happier RBA, topside offers are less certain and although the market has cleared away the market to the 0.8070 levels the market is likely to see offers pushing into the 81 cent level and some possibly offers from then to the possible breakout above 0.8240 and opening to 86 cents.

Overnight News

JPY:

BOJ Refrains From Boosting Stimulus Even as Inflation Fades

Japan Mar. Industrial Production Falls 0.3% M/m; Est. -2.3%

NZD:

RBNZ Maintains Key Rate at 3.5%, Would Cut on Weaker Prices

N.Z. 1Q Home-Building Approvals Fall Most Since 2012

N.Z. Household Lending Accelerated For a Fourth Month in March

USD/CNY:

U.S. Treasury Reiterates View Yuan Is Significantly Undervalued

CNY:

China’s Yuan Regains Fifth Ranking in Global Payments: Swift

China March Yuan Forex Trading Volume Rises 76.8% M/M: SAFE

GBP:

U.K. April GfK Consumer Confidence +4 vs Est. +4

AUD:

Australia March Credit to Business, Consumers Rose 0.5 % M/M

Australian 1Q Export Prices Fall 0.8% Q/Q; Est. Unchanged

CHF:

Swiss National Bank Posts 1Q Loss of CHF30B

SNB’s Proportion of Equities in FX Holdings Rose in 1Q

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

NZD       RBNZ Rate Decision A 3.50% | C 3.50% | P 3.50%

NZD       Building Permits M/M Mar A 11.00% | P -6.30% | R -6.50%

GBP       GfK Consumer Confidence Apr A 4 | C 5 | P 4

JPY         Industrial Production M/M Mar (P) A -0.30% | C -3.40% | P -3.10%

AUD       Import Price Index Q/Q Q1 A -0.20% | C 1.10% | P 0.90%

JPY         Housing Starts Y/Y Mar A 0.70% | C -1.80% | P -3.10%

07:00     CHF        KOF Leading Indicator Apr C 91.7 | P 90.8

07:55     EUR        German Unemployment Change Apr C -14K | P -15K

07:55     EUR        German Unemployment Rate Apr P 6.40%

08:00     EUR        ECB Monthly Bulletin

09:00     EUR        Eurozone Unemployment Rate Mar C 11.20% | P 11.30%

09:00     EUR        Eurozone CPI Estimate Y/Y Apr C 0.00% | P -0.10%

09:00     EUR        Eurozone CPI – Core Y/Y Apr (A) C 0.60% | P 0.60%

12:30     CAD       GDP M/M Feb C -0.20% | P -0.10%

12:30     USD       Initial Jobless Claims (APR 25) C 297K | P 294K

12:30     USD       Employment Cost Index Q1 C 0.60% | P 0.60%

12:30     USD       Personal Income Mar C 0.20% | P 0.40%

12:30     USD       Personal Spending Mar C 0.50% | P 0.10%

12:30     USD       PCE Deflator M/M Mar C 0.20% | P 0.20%

12:30     USD       PCE Deflator Y/Y Mar P 0.30%

12:30     USD       PCE Core M/M Mar C 0.10% | P 0.10%

12:30     USD       PCE Core Y/Y Mar C 1.40% | P 1.40%

13:45    USD       Chicago PMI Apr C 49.5 | P 46.3

Harry Hindsight              

• EUR: A quiet session through Asia and into the London with the market holding in a tight 1.0980 and drifting to the 1.0960 levels, London bought lightly pushing the market to just above the 1.1000 levels and again another period of slow movement over the course of the session into NYK, and then the market started to move after unsurprising European numbers, US GDP figures already expected to be lower came in beyond expectations with a 2% write down from the previous month coming in at 0.2% and the USD dropped quickly, stops were quickly triggered and the initial rally was to the 1.1070 areas before quickly dropping back and starting a concerted rally higher from then on, the market pushed quickly to the 1.1070 levels again and as with the first time the market struggled before breaking through and quickly passing through the 1.1100 area and further stops and within a very short time the market hit the 1.1180, the market continued to flirt with the areas however, the market struggled to break through the level and chopped around the area into the FOMC commentary, with no change the market was a little surprised with the less than dovish commentary it expected and dropped quickly through the 1.1100 levels to bounce off the 1.1080 levels before rising back to the 1.1110-20 levels into the close.
• GBP: Cable moved quietly through the Asian session holding around the opening 1.5340 areas into the grey hours before lifting slightly to 1.5380 as the EURGBP dipped to the 0.7140 levels to make the lows, a steady push to the 1.5400 level ensued with the market failing the level and dropping back into the 1.5360 level and a steady few hours in the area to the US GDP levels. For the most part the Cable now seemed to tag along with the Euro, rising on the GDP release to touch lightly through the 1.5400 level as with the Euro dipping back as option plays forced the Euro back and the Cable dipped back towards the 1.5360 levels before starting a steady climb higher and eventually touching just below 1.5500, GBP lost ground at this point as the EURGBP cross slowly moved from the lows to push above the 0.7200 level and touched the 0.7220 level and into resistance levels. The release of the FOMC commentary caused a minor recovery in the market for the USD and Cable eased back to trade in the 1.5420-40 areas for the close.
• JPY: A quiet session in Asia didn’t really improve during the day, trading around the 118.80-90 level for the most part the market ran into the London session moving slightly higher to the 118.95 area, a quick burst as the late buyers in the Asian session pushed the USDJPY to the 119.15 levels and then a steady climb until stalling at the 119.35 levels. While the market reacted to the GDP figure the movement was less volatile with the USDJPY initially touching back through the 119.00 level and then drifting lower to push again to the 118.80 areas into the FOMC and a bounce to the 119.05 areas and a quiet close.
• AUD: The Oz lost ground from the opening 0.8020 levels slipping into the Tokyo session drifting down to the 0.7990 levels and continuing only slightly over the next few hours to touch the 0.7980 areas and holding that level through into the London session. The release of the US GDP figures saw a resurgence of the Oz as the USD dropped quickly and the Oz pushed more steadily to the 0.8070 levels before the rally faltered as with the other pairings and the lead into the FOMC had only minimum effect of the Oz with the market pushing to the 0.8020 levels, the close in NYK saw a quick flurry of action with the release of the NZD decision and the Oz finishing around the 0.8010 level.

Yesterday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

NZD       Trade Balance (NZD) Mar A 631M | C 312M | P 50M | R 83M

NZD       NBNZ Business Confidence Apr A 30.2 | P 35.8

CHF        UBS Consumption Indicator Mar A 1.35 | P 1.19 | R 1.21

EUR        Eurozone M3 Y/Y Mar A 4.60% | C 4.30% | P 4.00%

EUR        Eurozone Business Climate Indicator Apr A 0.32 | C 0.21 | P 0.23

EUR        Eurozone Industrial Confidence Apr A -3.2 | C -2.8 | P -2.9

EUR        Eurozone Consumer Confidence Apr (F) A -4.6 | C -4.6 | P -4.6

EUR        Eurozone Economic Confidence Apr A 103.7 | P 103.9

EUR        Eurozone Services Confidence Apr A 6.7 | C 6 | P 6 | R 6.1

GBP       CBI Reported Sales Apr A 12 | C 26 | P 18

EUR        German CPI M/M Apr (P) A -0.10% | C -0.10% | P 0.50%

EUR        German CPI Y/Y Apr (P) A 0.40% | C 0.40% | P 0.30%

CAD       Industrial Product Price M/M Mar A 0.30% | C -0.10% | P 1.80%

CAD       Raw Materials Price Index M/M Mar A -0.90% | C -1.80% | P 6.10% | R 5.90%

USD       GDP (Annualized) Q1 (A) A 0.20% | C 1.00% | P 2.20%

USD       GDP Price Index Q1 (A) A -0.10% | C 0.40% | P 0.10%

USD       Pending Home Sales M/M Mar A 1.10% | C 1.00% | P 3.10% | R 3.60%

USD       Crude Oil Inventories A 1.9M | C 2.1M | P 5.3M

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

Good Luck,

Andy

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